My Audacious Goal: $50 Million In 40 Years

When I was 18 years old, I was working the night shift at a local grocery store, generally avoiding the ladies because they scared the crap out of me. I was very much into investing and growing my meager net worth because even then, I knew I wanted to be rich, dammit. I told this to people I worked with, and surprisingly they didn’t laugh at me. This makes them better people than I was.

So I set a goal. By the time I was 30, I wanted to be a millionaire. I figured if I had a million dollars I’d be so rich that that I wouldn’t need to worry about money ever again. I made it my all-consuming goal for years until I decided I’d rather get laid. It faded into the background, but was never forgotten.

Fast forward 14 years, and I have a confession.

I didn’t make it. I failed at my goal even after moving the finish line back a little.

At the risk of it sounding like I’m making excuses, I’m pretty okay with failing. I didn’t get to a million, but I got damn close. And that’s as close as I’ll come to revealing my true net worth, at least for now.

Once it became obvious that I’d hit $1 million at some point, I started to slack off a bit. I became okay with spending the money to buy a nice house to live in, even though that ultimately didn’t happen. I emphasized travel over making money. I took a job that gave me plenty of leisure time, and filled that time with unproductive nonsense. I pissed away a LOT of time on the internet while in Korea.

I started thinking about why my attitude changed, and a few reasons sort of jumped out at me. My decade of sacrifice worked out well for me, and a few minutes with a compound interest calculator made it obvious much of the heavy lifting was already done. All I really need to do now is not fuck things up, and I’ll end up hitting a few million eventually. It’s hard to stay motivated when you know it’s only a matter of time until you accomplish your goal.

And now that I have two incomes to invest while keeping living expenses relatively cheap, there will be even more money funneled into investments each month. Sharing fixed expenses is helpful.

So what should I do? Should I be content to spend my time watching television and underutilizing my potential, like some sort of early retiree? Hey, somebody has to be a helicopter parent to my future kids.

Hell no. Instead, I’m going to set another audacious goal. I want to get to a $50 million net worth in 40 years, which would put me at 72 years old. I think that’s a reasonable retirement age by the time 2055 rolls around.

I wanted to choose something that I thought I could achieve, yet something that was challenging. It’s not that I’m all about the money, I just think it’s a really convenient way to keep score. The person who ends up with the most money wins. In my world of investing, that’s how you measure success.

Many of you are probably scoffing at my goal, thinking I’m some sort of crazy dreamer who is more insane than a typical 17-year old girlfriend. And you might be onto something. But allow me to present the case that it’s actually easier than you might think.

Crunch the numbers, yo.

Let’s use the following conservative assumptions in my calculations:

Current nest egg – $500,000

Annual additions – $50,000

Rate of return – 10%

Admittedly the rate of return might be a little high, but I currently have more than the current nest egg at work and the amount added per year is bound to go up over time. I’m also not factoring in taxes, which will become more and more of an issue as time goes on. So I’m pretty happy with the tradeoffs I made.

Let’s see how the ol’ compound interest machine says I’ll do over the next four decades.

Huh. Turns out that I’ll be pretty close, even using conservative future projections.

Let’s break down the projections a little farther. How do I expect to be able to save $50,000 annually?

It’s not hard, really. If I can make $80,000 per year from all sources and my lady can earn $40,000, that puts us at approximately $90,000 after taxes. I’d say our annual spending is closer to $30,000, leaving us a $10,000 annual buffer zone.

The 10% rate of return is where I’m probably going to get some flack. Stock markets have done that over the long-term and the short-term (at least in the U.S.), but there was a decade in there when returns did squat. I’ve also done better than that over time when investing in real estate.

If I re-run the scenario at a 7% return, I get a nest egg of just $22 million. That’s not bad, but a far cry from the goal. But remember, I’m confident that my ability to save will continue to go up in the future, which mitigates some of that risk. But still, I need to be able to invest well.

There are a few reasons why I’m shooting for $50 million. I think it’s a good trade-off between achievable and too easy. It’s a nice round number. And it’s long-term enough in nature that we’ll have something to work towards for decades. It’ll also keep me from spending frivolously, since I’ll want to keep every penny to invest.

Typically, I’m not a fan of goals. I’ve always thought people spent too much time thinking about stuff they ought to do, rather than just realizing what they actually do is important to them — or else they wouldn’t be doing it. My advice has always been the same — figure out where you want to be or what you want to do, and then get at the plan. Focus on one or two really important things, and then forget about the rest.

I’ve always wanted to be rich. By crystalizing the goal into something concrete, I hope to increase my chances of success. I’m not sure it’ll work, since goals are really just a form of tricking ourselves. But hey, let’s give it a shot.

11 Comments

Interesting post, and good on you for wanting to create a new goal to give yourself a challenge again. I’d like to add two potential challenges that you didn’t mention :

1) in general people adjust their lifestyle based on their income, so depending on how long you’ve already been a 120k income couple, you may start to want to spend more like one. The same would be true as you both move up in incomes. I think this is common human behavior

2) 50 mil is a lot, and I’m not saying in the sense that it’s unattainable, but in the sense that it’s unnecessary. If we assume today’s comfortably wealthy net worth to be around 2 mil, in 40 years @ 3% , the same comfort would be at around 6.5 mil. My point is, once you get to like 20 mil net worth, you are very wealthy, even in future $. So at that point, wouldn’t you rather go to Fiji (insert other awesome way to vacation) than save an extra 10k or earn an extra few % return?

1. I’ve consistently made this much for 5-7 years now. Lifestyle inflation hasn’t been an issue yet, but agreed, it could happen in the future. My lady is pretty frugal, so I don’t envision issues there. But I’m sure there will be kids at some point, which tend to cost money. It’s something I’ll keep an eye on.

2. I’m an investor. Returns are the way investors keep score. It’s not that I’m motivated to make $x amount, I’m just looking for something that keeps me motivated to achieve a certain return each year. It’s about looking back and saying “hey, I was good at what I did.”

It takes about $10M to bootstrap your own mini research institute, ~$25-50M gets you the naming rights to a large one, or to fully fund and a smaller one through ~10 years of start-up operations… just in case anyone with $50M is reading this and isn’t sure what they could possibly spend that much money on.

That’s the plan at the end of the journey. Maybe not so much a research institute, but some sort of charitable thing. It’s not that I’m really motivated to help people, I just don’t think giving the money to my kids will accomplish much.

The inputs all seem reasonable – if you’re an active investor, a more aggressive annual return assumption is in order, methinks (otherwise, why are you investing actively? It’s part of the keeping score, right?).

But it’d be nice to be at a point where you have a massive pile and can hit your (perhaps slightly lower) goal Buffett-style, without topping up from saved income each year. Once you’re in the high 7 figures, won’t it make more sense to manage the pile full time? Plus, if you hit your 10% yoy like clockwork, you can start the Nelson hedge fund 🙂

Kids and keeping up the income grind seem to be the biggest wild cards, but you can play it by ear with both of those. Good luck

I agree it makes sense to switch over to managing my money full time at some point, and I probably will. But at this point I’m getting paid a decent amount to immerse myself in the markets, which is good enough for me.

How much will taxes suck away from that 50M? Once you have like around 3 million, why not not live like a rock star couple with most of the rest? Not quite the amount of Club + Bub that 50 cent did though…. Do commercials selling real estate from a boat or something… Oh wait..

Interesting post. If the numbers work this way, the 10% long term return holding, you’d hit $25M in your early 60’s. will you really prefer to keep working to go from more money than you’ll ever need to twice that?